Don’t ignore consumer law and find yourself on the wrong side of a Consumer Sales Practices Act lawsuit

Why you need to understand the Consumer Sales Practices Act (“CSPA”)

The CSPA is a series of laws that set forth many requirements that suppliers must follow in most commercial transactions. For instance, the CSPA, which includes the Home Sales Solicitation Act (“HSSA”) requires that suppliers follow certain procedures, such as include specific language and information in contracts, and it prohibits certain conduct.

If your business sells goods, provides services or a combination of goods and services for personal, family or household use, you need to understand the CSPA. Failure to follow these laws can put you and your business at risk for high damages. Some infractions can cost you three times the damages claimed by your customer, plus $5,000. Furthermore, if you lose the lawsuit, you might be responsible for paying your opponent’s legal fees.

Are you covered by the CSPA

The Ohio Attorney General defines a consumer transaction as “the purchase, solicitation, for purchase, or award by chance, of a product or service that is intended for home, family, or personal use.” The most common types of transactions involving the CSPA are roofing, home repair services, plumbers, masons, electricians, contractors, car dealers, auto repair facilities, alarm service suppliers and installers, but this list is not exhaustive.

How to you make sure you comply with the CSPA

Most parts of the CSPA are technical, so staying in compliance isn’t just a matter of using common sense or not doing anything stupid. The best way to understand how the CSPA impacts your business is to review your contracts, policies, advertisements, and warranties and make sure they are in compliance. For industries that have industry specific rules, special attention must be paid to those areas.

Very generally speaking, the below are some guidelines set forth by the Ohio Attorney General. These are minimum standards and should not be taken as the “end all be all” when it comes to the CSPA.

Accurately represent the characteristics of the product or service
Honor guarantees and warranties
Make no misrepresentation about the nature of the business, their products or services, the process of their goods, or the terms of a transaction
Not mislead consumers
Not take advantage of a consumer’s illiteracy, disability or inability to understand the terms of the sale
If you use subcontractors, you have to notify the consumer that you are using them and list them by name
Not sell a product or service knowing the consumer cannot afford or substantially benefit from it
Disclose important exclusions and limitations in advertisements
Not sell used items as new
Not use bait-and-switch tactics to trick consumers into paying higher prices

The above list is far from exhaustive and the reality is that courts interpret the laws and understanding how courts interpret the laws and apply them is what ultimately matters. A seasoned lawyer will interpret how courts apply the laws, look at the laws through the lens of your particular business and the services or goods you provide and how you provide them, assess where you are vulnerable, and then make sure that you are covered.

Stay tuned for the second post in a two-part series about the CSPA to understand better if you are violating the CSPA, and what you should do if someone does file a CSPA lawsuit against you.

Wick Law, LLC is a small business legal practice, representing owners, investors, and entrepreneurs in all aspects of commercial, corporate, and business law, estate planning, contracts and negotiations, business litigation, and real estate. For more information: Contact 614-572-6366, visit www.mwicklaw.com, or email us at mwick@mwicklaw.com. Wick Law, LLC is located in Columbus, Ohio.

(Materials in this article have been prepared by Wick Law, LLC for general informational purposes only. This list is for educational purposes and is not to be considered exhaustive. More items could be added to this checklist based upon the type of transaction or industry standards. These materials do not, and are not intended to, constitute legal advice. The information provided is not privileged and does not create an attorney-client relationship with Wick Law, LLC or any of the firm’s lawyers. This checklist is not an offer to represent you. You should not act, or refrain from acting, based upon any information in this checklist. Wick Law, LLC maintains offices in Columbus, Ohio, and has lawyers licensed to practice in Ohio and in the United States District Court, Southern District of Ohio. The firm does not intend to practice law in any jurisdiction where the firm is not licensed.)